The company reported a 9.7 percent rise in 2017 adjusted operating profit to 926.6 million euros ($1.14 billion), which it said was in line with its forecast of about 930 million euros.

Shares initially fell 2 percent but quickly recovered to show little change on the day.

Pirelli has focused on high-value tyres for Formula One racing teams and premium automakers since its less profitable industrial unit was hived off as part of a 2015 takeover by China National Chemical Corp (ChemChina).

Premium tyres accounted for 57.5 percent of 2017 revenue of 5.35 billion euros, the company said, adding that it expects to lift the contribution to 60 percent this year.

Selling more high-margin products and improving efficiency more than balanced out the effects of increases in raw material costs, cost inflation and amortisations, the company said.

One of Italy's best-known brands, Pirelli returned to the stock market in October, two years after the ChemChina buyout. ($1 = 0.8117 euros) (Reporting by Isla Binnie; Editing by David Goodman)